Home » Dividend Updates » May 2018 Portfolio Update

As a dividend growth investor (DGI), I am driven to keep track of both my inflows and outflows. Increases in investment income represent one measure to assess whether I am winning or losing the game of money. While I have been diligent to track my progress on a quarterly and annual basis over the past few years, through 2018 I have also been providing monthly income updates.

Please note that all Canadian stocks are owned in CAD on Canadian exchanges.

CAD Dividends

CompanyCAD Payments ($)
RioCan Real Estate Investment Trust (REI.UN)31.32
Jean Coutu Group Inc. (PJC.A)42.15
Chartwell Retirement Residences (CSH.UN)4.90

Dividend Summary

The month of May has generated $78.37 in dividend income. As noted previously the Feb-May-Aug-Nov quarterly payment schedule is my slowest in terms of income generated. While I have entertained the notion of targeting a dividend growth company which makes payments on this schedule just to even out my passive income, I have at this stage rejected the idea as it makes most sense to focus first and foremost on quality.

It would be much easier in retirement to be disciplined and spread the income out on my own than to have to deal with a dividend reduction based on owning a subpar company simply because of the months in which it makes payments to shareholders. Being able to make such a decision is known as a good money problem.

Goodbye to Jean Coutu

After PJC.A made two dividend payments in May. The first was May 4 and represented the quarterly dividend which the company would normally make toward the end of May. The second, paid May 10, was a special dividend and was a nice parting gift as the company was thereafter amalgamated into Metro, Inc. (MRU). While MRU is best known for its grocery business, it did compete with PJC.A, primarily in the Quebec market, and now should be able to find some synergies between the operations.

MRU primarily operates within Ontario and Quebec with ~950 grocery operations and ~250 pharmaceutically-minded operations. Generally speaking, consolidation of this sort can lead to improved operations as competition is decreased and opportunities to scale are increased both in terms of achieving better deals with suppliers and reaching more consumers with a wider product offering. That said, it ultimately comes down to execution as there is never a guarantee that two merged cultures will interact harmoniously.

My relationship with PJC.A was a positive one overall, though less successful as I had hoped from the outset. I purchased my initial shares in November of 2014 and continued averaging down through three additional purchases between 2015 and 2016. I ultimately made a capital gain of ~6.5% and raked in $333.53 in dividends. The sale of my shares left me with $5,561.50 in working capital.

Investing the Cash Surplus

While I do not view the overall market as particularly attractive at the moment, I decided that I would be better off to deploy the cash than to park it in my high interest savings account to earn the 2.5% I am currently netting. As a result, I took a look through my portfolio to see where I could find some attractive yields with solid dividend growth to boot.

I eventually settled on two names I already own and one new addition –

1) I picked up 25 shares of BNS at ~$81 per share for a cost of ~$2,025CAD on the Toronto Stock Exchange. On the current $0.82CAD quarterly dividend, I expect this to generate $20.50 quarterly or $82.00 annually.

2) My second purchase was for 50 shares of FTS at ~$41.75 per share for a cost of $2,087.50CAD on the Toronto Stock Exchange. With the current $0.425CAD quarterly dividend, this should bring in $21.25 quarterly or $85.00 annually.

3) My third purchase with the proceeds was for 20 shares of MRU at ~$13 per share for a cost of ~$860CAD on the Toronto Stock Exchange. With the $0.18CAD quarterly dividend, I have this marked for $3.60 quarterly or $14.40 annually. I likely would not have considered MRU initially due to its low dividend yield, despite its high dividend growth rate. However, given that PJC.A was amalgamated into it, I decided to keep a bit of exposure both because I believe there is opportunity for growth and possibly to satisfy a sense of nostalgia as well.

In aggregate, these purchases cost $4,972.50 and will produce $181.40 annually for a blended yield of ~3.65%. Conversely, PJC.A was bringing in $118.04 annually and as a result I am realizing an immediate $63.36 annualized bump in my forward dividend income. Further, when deducing the total cost from the sale of PJC.A shares, the above also left me with $589 extra to invest elsewhere.

4) A fourth purchase for the month came by way of 65 shares of CU at ~$31.00 per share for a total cost of $2,024.95CAD on the Toronto Stock Exchange. With the current $0.3933CAD quarterly dividend, this will bring in $25.56 quarterly or $102.24 annually.

Conclusion

May is always a slow month in my portfolio for dividend payments. That is unlikely to change any time soon as I have been focusing on reinvesting in business I already own and should remain heavily weighted on the other two dividend payment schedules (Jan-Apr-Jul-Oct and Mar-Jun-Sept-Dec) for the foreseeable future.

The sale of PJC.A this month offered me an opportunity to rebalance my portfolio into higher dividend yielding equities and provide an immediate boon to my forward dividend income. I am pleased to add MRU to my portfolio, even if only with a small and rather token investment.

I have built plenty of momentum as I look forward to June.

Thank you for reading.

Full Disclosure: Long CU, FTS, REI.UN, CSH.UN, MRU

8 thoughts on “May 2018 Portfolio Update

  1. While May might have been slow in terms of dividends payments, you certainly made up for it with your stock transactions, Ryan. Nice job increasing your forward dividend income and still having extra cash left over… a win-win!
    My quarter-ending months deliver about 2x the other months each quarter. I agree with your assessment on focusing on quality companies as the 1st selection criteria.
    Enjoyed the monthly update!
    Engineering Dividends recently posted…Recent Sell – SCGMy Profile

    1. Hi ED,

      Yeah, before I started tracking monthly as opposed to just monthly, I didn’t realize how lopsided the payments come out based on the companies in my portfolio. It’s been pretty eye-opening and suggests one would need some real cash flow management to even out one’s income if relying solely on these payments for lifestyle (as opposed to just reinvesting while in the accumulation phase).

      Thanks for stopping over and dropping a line.

      Take care,
      Ryan

  2. Jim Wang says:

    2.5% is a nice interest rate on bank savings… everything seems better in Canada these days! 🙂
    Jim Wang recently posted…Average Credit Score in America: It’s Higher Than You Think!My Profile

    1. Hi Jim,

      Yeah, 2.5% is definitely great. I have it until the end of June and then I’ll be back on the phone renegotiating. Part of the process!
      I won’t argue with that; Canada is definitely a great place to set up shop for the long term.

      Take care,
      Ryan

  3. Csdl says:

    Get Rich Brothers, thanks so much for the post.Much thanks again. Really Cool.

    1. Hi Csdl,

      Glad you enjoyed the post.

      Take care,
      Ryan

  4. Scott says:

    Thanks for the update. I sometimes think about evening out the dividend payments too. The problem is that you might make sacrifices in the quality of investments in order to do so. And, given that we are still in the accumulation phase, we aren’t relying on these dividends yet to pay for living expenses. Once we start withdrawing dividends to pay living expenses, then we’d just have to make sure to keep any excess dividend payments from the larger payout months to make up for the slower months.

    Scott

    1. Hi Scott,

      Exactly. As much as it would be nice to even out the payments by investing in companies that do the work for us, it is truly backwards to be investing on that basis. The emphasis needs to always be on quality, first and foremost.

      Thanks for weighing in.

      Take care,
      Ryan

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